Vietnamese furniture exporters have been grasping opportunities to expand their foothold in the foreign market as the country is a member of multiple trade deals including the CPTPP and EVFTA, being emerged as an attractive alternative option.
|Making wooden products in a facility in Ung Hoa District, Hanoi. Photo: Cong Hung
Insiders have said that the challenges are huge, but the opportunities since the pandemic have been pushing major buyers in Europe, the US, or Japan to look beyond China.
Local firms, however, would not be able to grasp such opportunities if they are unable to approach customers during the pandemic.
Taking furniture to online platforms
While the Covid-19 pandemic has been causing tremendous hardship for businesses over the world, the combination of traditional and online selling channels is expected to open the door for Vietnam’s wood industry to recover and promote its trade overseas.
Do Xuan Lap, chairman of the Vietnam Timber and Forest Production Association (VIFOREST), said e-commerce has become vital for local producers to access customers globally.
“Such trend is inevitable and remains a long-term solution, not only for the wood industry but also other sectors,” Lap added.
Vice-Chairman of the Vietnam e-Commerce Association (VECOM) Nguyen Ngoc Duy said at present, the majority of Vietnam’s wood producers are simply processing wooden products with designs provided by buyers, which generates low value.
“Enterprises should be able to take charge of the design, branding, and later integrating into the global value chains,” Duy stressed.
According to Duy, most e-commerce platforms are integrated with B2C or B2B channels for producers to look for potential buyers. “Timing is essential, and firms should take decisive action to migrate their operations to online platforms,” Dung continued.
A report from the Ministry of Industry and Trade (MoIT) revealed while there was subdued performance among Vietnam’s key export staples during the first eight months of 2021, revenue from wooden and forestry exports rose sharply by 43% year on year to US$11.2 billion.
During the period, the US, Japan, China, EU, and South Korea made up 90% of Vietnam’s total forestry exports, while the EU-Vietnam Free Trade Agreement (EVFTA), came into effect last August, paving the way for Vietnam’s wooden products to further penetrate the European market.
The turnover of Vietnam’s furniture exports to Germany grew by 16.7% year on year, or 20.2% of the country’s revenue from Europe; while other European markets also witnessed strong growth, including France (29.5%), the Netherlands (50%), and Belgium (55.7%).
Despite the sector having put up a strong performance to date, experts expressed concern the serious Covid-19 situation globally may impact export prospects to major markets, such as the US, EU, Japan, or South Korea.
To Xuan Phuc, representative of the Forest Trends said there are two export scenarios for Vietnam’s forestry sector in the remainder of 2021. In the first case, exports could recover since the fourth quarter and reach 70% of the average turnover recorded in the first half of 2021.
“This means Vietnam’s furniture exports may earn around $13.5 billion in 2021,” he added.
In a less optimistic case, however, Phuc said the export revenue in the fourth quarter may plunge by 30% against the previous period, leading to a total figure of $12.69 billion this year.
“Both cases are dependent on Vietnam’s progress in containing the Covid-19 pandemic,” he noted.